In a bipartisan vote yesterday, the U.S. House of Representatives passed the Transparent Airfares Act of 2014 which would roll back 2012 legislation requiring that the full fare be displayed at all steps of the airline ticket booking processing. We’ve had this discussion before, so there is no need for me to go too much into why I strongly oppose the Transparent Airfares Act of 2014.
Pennsylvania Republican Congressman Bill Shuster is the chief sponsor of the Act and reasons the bill is necessary because–
Virtually all consumer products are advertised at a base price, with taxes added on at the point of purchase. But Department of Transportation regulations have fundamentally and unfairly changed the advertising rules for airfares by requiring all government imposed taxes and fees to be embedded in the advertised price of a ticket. As a result, the fact that Americans are paying higher and higher government imposed taxes and fees to travel by air is being hidden from them. This common sense bill will allow consumers to see the full breakdown of their ticket costs, so they know how much they’re paying for the service, and how much they’re paying in government imposed taxes and fees.
Only it is not that simple. First, I strongly believe that certain government taxes and fees are too high – we just saw an increase in the TSA’s “September 11th Security Fee” last week – the rate has more than doubled to $5.60 per direction of travel (previously it was $2.50 for each segment, capped at $5.00 each way). But let us not forget that taxes/fees cover what must reasonably be considered part of the airfare – airport infrastructure and yes, even security. This is indisputably part of the cost of airfare, for security screening, airport concourses, runways, and control towers are all necessary components of commercial air travel.
The Congressman’s statement is devoid of logic – current regulation does not prohibit a breakdown in price of airfare, it merely prevents the bait-and-switch games we routinely saw prior to 2012, where airlines would advertise “$300” transatlantic airfare only to actually charge triple that once all taxes/fees were added in. Carriers can still breakdown the taxes as long as the full price is displayed. As I pointed out with my recent hotel search in Las Vegas, not displaying the full price is nothing more than false advertising meant to lure customers into a deal that is too good to be true. While true that in the USA taxes are typically added on at the point of sale, a sales tax is far different than taxes that undergird the air system that is directly necessary to make air travel possible.
And just who is Rep. Shuster serving? Fly2Travel points out that his loyalty may be more to the airline industry than the people he was elected to serve. Take a look at his top campaign contributions for this year–
| Contributor | Total | Indivs | PACs |
|---|---|---|---|
| Airlines for America | $16,700 | $6,700 | $10,000 |
| Delta Air Lines | $13,500 | $10,500 | $3,000 |
| American Trucking Assns | $12,500 | $2,500 | $10,000 |
| Nossaman LLP | $12,000 | $7,000 | $5,000 |
| United Continental Holdings | $12,000 | $2,000 | $10,000 |
It should be noted that the blame does not just fall exclusively on the Republicans, as this bill has garnered widespread bipartisan support in the House.
Shoppers are smart enough to figure out the price of an airline ticket without federal regulation, said Oregon Democrat Peter DeFazio, a bill co-sponsor.
“Talk about the nanny state,” he said. “Give me a break. What do they think, Americans are idiots?”
I think you are an idiot, Congressman, to complain about “nanny statism” when it comes to misleading airfare pricing.
Passage of the bill in the House is not the final step. The Senate must pass an identical bill and it must be signed by the President, two distinct unlikelihoods.
In fact, the Senate seems to thankfully be moving in an opposite direction, Senate Transportation Committee Chairman Bob Menendez (D-NJ) introducing a competing bill called the Real Transparency in Airfares Act which would ddouble maximum penalties (to $55,000 per day) for airlines and ticket sellers like Orbitz and Expedia that do not post the full fare.
So it sounds like stalemate ahead, which is certainly better than rolling back consumer protections that protect consumers from bait-and-switch airline advertising scams.
I am more than alright with Taxes being taken out of the initial fare that is shown as LONG as Fuel surcharges are required to be in the initially displayed price. However, I think all airlines should do it like Spirit does. They show the full fare from get go, with “Our cut” that lists the base fare + fuel surcharges and then the Government cut (Taxes +Security Fees) listed directly below.
However, at the end of the day, I don’t see why we just don’t adopt the system that the rest of the world uses. The price seen is the price paid. All taxes and fees included. All my friends who are from South America, Europe, and Asia complain about how prices jump by 5-15% when they check out. It’s almost like false advertising!
Matthew – while I generally agree with the logic in your post, I do have one question. How, in your example above, would a $300 transatlantic airfare triple once taxes and fees are added in? My reading of the bill is that GOVERNMENT-IMPOSED taxes and fees get to be broken out, but that airline-imposed fees and surcharges must remain part of the displayed fare. I would imagine that you’d have to strip out the fuel surcharges to end up with a tripled display fare. Even on the notoriously taxed DFW-LHR route, BA shows a base fare of $621 and fees of $713.21, but only $255.21 of that is government taxes and fees on a round-trip ($458 is a fuel surcharge). Am I mistaken here? Would airline be able to strip out YQ surcharges under this rule?
@Rocky, it’s not “almost like false advertising,” IT IS FALSE ADVERTISING! It absolutely needs to be the price you see is the price you pay. I couldn’t agree more. No hidden bullshit.
@Matt,
Here’s my problem with this whole bill. I get that money talks and Shuster is doing what his endorsers want him to do. I don’t like it but I get it. But what irks me most about this is the name of the bill. There is nothing transparent about this bill at all. In fact, it’s the opposite of transparent. Don’t pretend like you’re doing us a favor and treat us like we’re a bunch of morons Shuster. You’re not fooling anyone.
There’s too much focus on airlines. I am fine as long as consistent standards are applied to hotels and rental cars, which are much worse cause you don’t see the fee until you’re at the place. Resort fees, convenience fees, checkout fees?
At least with airline fees, everything adds up before I pay online.
Yes, isn’t it that mislabeled “fuel surcharge”, which I think has been relabeled recently (e.g., “international surcharge” below) since that was inaccurate, that is really the problem? For example, I recently bought a TATL ticket for 1176. But the ticket price is shown as 518 and the taxes and fees are as follows:
U.S. Customs User Fee $5.50
U.S. APHIS User Fee $5.00
U.S. Federal Transportation Tax $35.00
U.K. Passenger Service Charge $40.50
Belgium Embarkation Tax $38.90
U.S. Immigration User Fee $7.00
International Surcharge $516.00
U.S. Passenger Facility Charge $4.50
September 11th Security Fee $5.60
To my way of thinking, I really bought a 1034 ticket (which is what the airline gets) plus 142 in taxes. That is what it ought to show. Right now, the airlines seem to be trying to hide part of the ticket price making you think it is a tax, when it is not.
@Arthur and Sanjeev and James: I agree with all of you.
@MeanMoesh – I was thinking more of European carriers on flights within Europe than legacy carriers in thinking about the price tripling. I can cite many examples–from LCC carriers like Ryanair to LH and AF. You are correct that my example is no longer relevant because this rule, as far as my reading of it, would not allow fuel surcharges to be included in the tax list.
These are the same politicians who support airline mergers, buying the industry line that they are “good for consumers”. What a bunch of hogwash! It’s blatantly apparent that lawmakers are good at law and not basic economics. Thanks for staying on top of this bill for us. Just the name of it should cause red flags to go up.